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Reproduced with the permission of 18 Journal of International Arbitration (August 2001) No. 4, 481-486

Teaching about International Commercial Law and Arbitration: the Eighth Annual
Willem C. Vis International Commercial Arbitration Moot

Eric E. Bergsten [*]

Legal education has not kept pace with the developments in international commercial law, including arbitration, that have taken place during the past several decades. That is understandable. The program of study in all countries is already overloaded with the subjects of domestic law. It is difficult to introduce these new subjects into the program of study, or to do so more than superficially. Therefore, it is particularly important that a major step in the right direction has been taken, namely the Willem C. Vis International Commercial Arbitration Moot. This note describes briefly the origins and development of the Moot and in more detail the Eighth Moot, which came to a close on 12 April 2001 in the Festsaal of the Vienna Rathaus (City Hall) with the Final Arguments and an Awards Banquet for 620 people.

A bit of background in regard to the Moot is in order. It was first proposed at the UNCITRAL Congress on International Commercial Law in 1992 as a means of interesting law students in the work of UNCITRAL, more specifically in the United Nations Convention on Contracts for the International Sale of Goods (CISG) and in international commercial arbitration. The Institute of International Commercial Law at Pace Law School in White Plains, N.Y., where two former Secretaries of UNCITRAL, Willem Vis and I, were teaching, took up the concept of such a student competition. It was decided that the Moot would comprise both written memoranda and oral arguments and that the oral arguments would take place in Vienna, home of UNCITRAL. Soon after the commencement of the First Moot, Willem Vis died of cancer and the Moot was named in his honor.

The Moot has grown in every sense in the eight years of its existence. In the First Moot in 1994 eleven law schools from nine countries came to Vienna. In each of the succeeding years an average of slightly more than eleven additional law schools have taken part. This year 94 law schools from 31 countries on all six inhabited continents participated.[1] With each team averaging more than five members, some 550 students took part in the Eighth Moot. In the First Moot each team argued twice, once as claimant and once as respondent. The best two teams then met in a final argument to determine the winner. There were a total of twelve arguments. In the Eighth Moot [page 481] each team argued four times, twice as claimant and twice as respondent. Including the four elimination rounds to determine the winner, the Problem was argued in front of 203 separate panels of three arbitrators each. Two hundred and forty lawyers and law professors participated in those panels and contributed to the professional atmosphere in which the arguments took place.

The Problem is distributed in early October. It consists of the statement of claim and statement of defense with any necessary exhibits. Recent Problems also include the most important correspondence with the arbitral institution, which this year was the ICC Court of International Arbitration. While the correspondence is unlikely to change the legal issues that the students must consider, it teaches better than any lecture could do the role of the institution's secretariat. It also gives the Problem an aura of reality that is often missing in law school moots. After distribution of the Problem each team prepares and submits in early December a memorandum supporting the position of the claimant. Prior to Christmas the team receives a memorandum prepared by one of the other teams to which it must prepare the memorandum for respondent by mid-February. By this time the teams are well prepared on the facts and the law. At the oral arguments in Vienna, which take place the week prior to Easter, each team argues four times, twice for claimant and twice for respondent. An important feature is that they never argue against another team from their own country. This is truly an international event at every stage.

The Problem always involves a dispute regarding an international contract of sale with the dispute to be resolved by arbitration. That keeps the Moot true to its original purpose - to publicize the CISG. Moreover, a dispute involving a sale of goods is one that the students can understand but that can raise interesting and difficult legal issues. Experience has shown that the students usually have more difficulty with the arbitration issues that are always present. In addition to the CISG, the sale of goods is subject to other such internationally adopted legal texts relevant to a sale of goods, such as Incoterms or the Uniform Customs and Practice for Documentary Credits, as may be relevant. Since the sale of goods in this year's Problem generated a claim of trademark infringement, the students were referred to the major trademark conventions and agreements, though those texts did not really enter into the Moot except by way of background information. The arbitration is always subject to the UNCITRAL Model Law on International Commercial Arbitration and the fictitious countries are party to the New York Convention. The arbitration rules governing the arbitration have rotated among the sponsoring arbitral institutions, American Arbitration Association, Chartered Institute of Arbitrators, ICC, LCIA, Vienna International Arbitral Centre and UNCITRAL. In the Eighth Moot the ICC Rules of Arbitration governed the arbitration.

The sale in this year's Problem was by a manufacturer of athletic equipment for water sports under the trademark "Vis" to a retail chain of sports equipment stores in Danubia. After the retailer began to advertise and sell them to the general public, it [page 482] received a letter from the Vis Fish Company stating that it had registered "Vis" as its trademark in Danubia for all water-related products. It was noted in one of the letters from the Vis Fish Company that "Vis" means fish in Dutch. Further advertising and sale of the Vis Water Sports equipment would constitute an infringement for which the retailer would be held responsible. When the retailer requested the advice of counsel, it was told that the trademark infringement claim would eventually fail, but that the Vis Fish Company was known for aggressively protecting its mark. The retailer could expect litigation that would be disruptive to its business. When it then notified Vis Water Sports of the trademark infringement claim, it received the reply that the infringement claim should be resisted and that Vis Water Sports would reimburse "all reasonable legal expenses." The reply did not satisfy the retailer and, since they could purchase equally satisfactory water sports equipment elsewhere that did not bring with it the necessity to defend the manufacturer's trademark against a claim of infringement, it decided to avoid the contract.

A number of issues under CISG are raised by this Problem. The major one is whether Vis Water Sports as seller has breached its obligation to the retailer as buyer to deliver goods "which are free from any right or claim of a third party based on, industrial property or other intellectual property" in Danubia, the country of the buyer. CISG, article 42(1). Has the seller breached its obligations whenever any third party makes a claim no matter how little merit the claim may have? If not, how meritorious does the third party's claim have to be before the seller has breached its obligations. If the seller has breached its obligations, what remedies should be available to the buyer? It is understandable that the retailer has no desire to be involved in a trademark infringement action that is not their own, especially when they can procure goods of equivalent quality from other sources. The only way to preclude such a possibility would be to cease selling the goods, which implies avoidance of the contract by which they were procured. However, article 49(1)(a) of the CISG requires that the breach by the seller be "fundamental" for the buyer to avoid the contract. It is not clear whether the disruption to business caused by the necessity to defend a trademark infringement action "results in such detriment to the [retailer] as substantially to deprive him of what he is entitled to expect under the contract", as required by article 25 of the CISG. Furthermore, articles 81-84 of the CISG, require the parties to a contract that has been avoided to make restitution of that which was furnished by the other party. In a case where some of the goods have already been sold in the normal course of business, there could be no restitution of all of them but "the buyer must account to the seller for all benefits which he has derived from the goods" for which restitution is not made. Do those benefits include the net profit realized on the retail sale, and how would the net profit be determined? These are all difficult questions, but ones that could arise in any sale to a foreign country of goods subject to intellectual property law.

As mentioned above, the students tend to have more difficulties with the arbitration issues than with the issues arising out of the sale. That may be partly [page 483] explained by the fact that international arbitration is not a subject that many law students study while still in law school. It may also be that in many countries students are not taught to recognize the procedural difficulties associated with prosecuting a substantive claim. That tends to be learned at a later stage of a young lawyer's development. It is no surprise, therefore, that some of the teams did not realize that they would have to establish that the arbitral tribunal had jurisdiction, and that there are special rules in regard to the conclusion of an agreement to arbitrate, before the tribunal could consider the substantive questions. The difficulty may have been even greater for the students in the Seventh Moot. The arbitral issue centered on the question of what to do with a witness statement under the LCIA Rules, when the party against whom the statement was introduced requests oral examination of the witness but the party who introduced the statement asserts that it cannot produce the witness since his employment has since been terminated in such circumstances that there is litigation in regard to the termination. The Problem this year introduced the kind of jurisdictional problem that can so easily arise in practice and which is currently being considered by UNCITRAL.[2]

The jurisdictional difficulties arose out of the way in which the contract, or contracts, of sale was concluded. The retailer visited the web site of the seller and subsequently inquired about receiving a better price than that offered on the website. After having received information that satisfied them, they placed a purchase order by e-mail. The retailer attached their general conditions of purchase to the e-mailed purchase order, which included a standard ICC arbitration clause. The seller accepted the order by e-mail and said that the buyer should visit their website for the seller's general conditions "which we always include in our contracts." The seller's general conditions contained a forum selection clause calling for any litigation to take place in the commercial court in their country. After having received the goods and having found them to be quite satisfactory, the retailer placed a second order, again attaching their general conditions. The seller did not mention their general conditions in its acceptance of the second purchase order.

When the seller, Vis Water Sports, did not subsequently agree to the avoidance of the contract and restitution of the purchase price of the goods sold to the retailer, with whatever set-offs that were applicable, the retailer commenced ICC arbitral proceedings in regard to both purchase orders.

Many law students and young lawyers think that they must contest all issues, even those that are clearly losing issues. However, by the end of the oral arguments in the Moot it was clear to all the students that the seller's forum selection clause had become [page 484] part of the first purchase order and there could be no arbitration in regard to that purchase order. It was less clear as to whether there was an effective arbitration clause in regard to the second purchase order. It was necessary to argue that communication by e-mail constituted "writing" under article 7 of the Model Law. That was not particularly difficult since the Model Law includes writing as a "means of telecommunication which provide[s] a record of the agreement". The aforesaid discussions in UNCITRAL are in part whether such communications constitute a "writing" under the New York Convention, but that question was not immediately at issue in the Moot. The more difficult, and problematic, issue was whether the arbitration clause in the purchase order was binding when the seller accepted the contract of sale but did not specifically accept the general conditions containing the arbitration clause.

The Festsaal of the Vienna Rathaus was well filled on 12 April 2001 when the Final Argument was held. The panel was presided over by Dr. Robert Briner of Lenz & Staehelin, President of the ICC International Court of Arbitration. Co-arbitrators were Dr. Eva Horvath, President of the Court of Arbitration in Budapest and Mr. James Myers Esq., Gadsby & Hannah LLP. The claimant was represented by a team from the University of Cologne while the respondent was represented by a team from Monash University, Australia. It was the eighth time both teams had argued the Problem during the Moot week, having argued both sides of the issues before reaching the finals. The quality of the argument by both teams met the highest professional standards, a sentiment echoed by the arbitral panel at the end of the proceedings and attested to by all observers.

The Moot does not announce a winner of the arbitration. We shall never know whether the arbitral panel would have found that it had jurisdiction of the dispute, whether Vis Water Sports breached their obligations to deliver goods free from the claims of trademark infringement by the Vis Fish Company, whether the retailer was justified in avoiding the contract because of the infringement claim or what form of restitution they would have had to make in regard to the goods that had already been sold in the ordinary course of business. The winners in the Moot are those who make the best presentations.

In the Eighth Moot the winner of the team oral competition was Monash University with the University of Cologne in second place and Harvard University and Humboldt University, Berlin tied for third. The winner of the award for best memorandum for claimant was the University of Freiburg, second place winner was the University of Basel, while third place was taken by the University of Maastricht. The winner of the award for best memorandum for respondent was the University of Zagreb, with the University of Freiburg in second place and the University of Queensland in third place. Finally, the winner of the award for best individual oral advocacy during the four rounds when all teams argued was Trevor Stockinger, Loyola Law School, Los Angeles. Second place winner was Ivana Radic, University of Rijeka and the third place winner was Michael Karschau, University of Kiel. [page 485]

As a means of promoting knowledge of international commercial law and arbitration among law students, the Moot has been an outstanding success. Nowhere else can a law student learn so much about disputes and their settlement in the international commercial world. In its eight years of existence, more than 2000 students have taken part. Many law firms recognize participation in the Moot as a significant factor when reviewing resumes of prospective associates. But the Moot does more than teach law students about an area of the law. It is also an opportunity for them to meet students, lawyers and law professors from other countries in a context where they all face the same issues. Many friendships are made that will carry over into their later careers in the law.

For some of them, the first step is active participation in the Moot Alumni Association.[3] The nucleus of the MAA was formed by the members of the team from the University of Cologne in the Third Moot in 1996. In addition to taking the lead in stimulating the social interaction among the members of different teams, the MAA has begun to undertake significant professional activities. On the day prior to the opening of the Moot in April 2000, it co-sponsored with the International Bar Association, a conference celebrating the twentieth anniversary of the signing of the CISG. In 2001 it co-sponsored with ICCA a conference directed toward Moot participants, both arbitrator and student, on "The Challenging World of Arbitration". Ambitious plans for the future are being made, and one can only look forward with interest to see how they turn out.

At the beginning of this report it was indicated that a third of the participants at the Moot were lawyers and law professors who had come to Vienna to judge the performance of the students. ICCA scheduled the meeting of its Council in Vienna so as to join with the MAA in co-sponsoring the arbitration conference mentioned above. Most of the Council members stayed to participate as arbitrators. The young lawyers' group of the LCIA met with MAA members just prior to the opening session of the Moot. Most of the arbitrators, however, came individually because of the thrill of seeing young people from so many different countries who are so dedicated to presenting their arguments on practical and difficult legal issues to senior colleagues from countries other than their own. Not to be forgotten, however, is that the Moot has also become a superb opportunity to meet, socialize and network with the other arbitrators at the numerous receptions offered by Viennese law firms, at the Heurigen and, in general, when not hearing arguments. Inquiries about participation as an arbitrator in future Moots are welcome. [page 486]


FOOTNOTES

* Professor of Law, Emeritus, Pace University; Secretary, United Nations Commission on International Trade Law, Retired.

1. The list of participating law schools in all of the eight Moots, along with the Problems and the award winners is to be found on the Moot website, <http://www.cisg.law.pace.edu/vis.html>.

2. A/CN.9/WG.II/WP.113, prepared for the session of the UNCITRAL Working Group Arbitration in New York from 21 May to 1 June 2001, contains draft legislative provisions to modify art. 7 of the UNCITRAL Model Law on International Commercial Arbitration to provide for the recognition of a number of ways of satisfying the requirement that the arbitration agreement be in writing. The same report contains the outline of a proposed resolution of the General Assembly recommending to Governments that art. 11(2) of the New York Convention be interpreted in conformity with the proposed changes to art. 7(2) of the Model Law. The report and its predecessors are available at <http://www.uncitral.org>.

3. The Moot Alumni Association website is <http://www.maa.net>.


Pace Law School Institute of International Commercial Law - Last updated January 14, 2002
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